More tightening ahead as Osborne plans tax rises

Chancellor George Osborne is preparing the public for a few harsh measures in this week’s Budget though he will also offer help to hard-pressed savers.

Further cuts are expected as he attempts to balance the government’s books which are £18 billion short of the Office for Budget Responsibility’s forecasts as a result of slower growth.

He will argue that the new round of cuts will be marginal, saving £4 billion over the remainder of the parliament and equating to 50p in every £100 of government spending.

But the disabled and motorists are among those likely to be targeted among a raft of cutbacks and tax rises, including additional insurance taxes on driving, health and homes.

He will launch a help-to-save scheme, enabling 3.5 million people to have their savings topped up by up to £1,200, while the minimum wage for 21- to 24-year-olds will rise by 3.7% to £6.96 an hour.

In another ‘giveaway’ he is expected to raise the threshold at which individuals pay income tax by £300. He may also raise fuel duty by RPI inflation which would mean an additional 1.3%, increasing the price per litre by 0.75p to 58.7p.

There are hopes that he will offer additional support for the oil & gas industry, but the chances of a repeat of his 2% cut on whisky and other spirits look slim.

John Swinney, Scotland’s Deputy First Minister, has called for greater help for the North Sea Oil & Gas sector, action to tackle fiscal barriers to exploration in the North Sea, an easing of the tax burden on the industry, improved access to decommissioning tax relief and urgent consideration of non-fiscal support, such as government loan guarantees.

He has asked that Mr Osborne to highlight the joint aim of both governments to reduce rail journey times between Scotland and London to three hours or less, and free up more capacity on the network.

In a letter, Mr Swinney wrote: “Since the Autumn, the global outlook has weakened and independent forecasters have downgraded growth prospects across the world economies. Although the UK and Scotland have shown some resilience, growth rates have slowed and our economies are clearly not immune to global headwinds.

“It is therefore imperative that the Chancellor uses the Budget to set out measures to stimulate the economy and support growth rather than continuing to abide by fiscal rules that are damaging and needlessly restrictive.”